Dykes: Dairy Wants Aluminum and Steel Tariffs Lifted

Nov 28, 2018

Michael Dykes, D.V.M., IDFA president and CEO, this week joined executives from manufacturing organizations and companies at a briefing on Capitol Hill to discuss the U.S.-Mexico-Canada Agreement (USMCA) and the impact that U.S. tariffs on aluminum imports are having on U.S. industries. Dykes said that while the dairy industry is pleased that the USMCA negotiations are complete and Mexico remains a duty-free market, the benefits won’t be realized until the U.S. tariffs and Mexico’s retaliatory tariffs on U.S. dairy exports are lifted.

“We hope that a deal is reached between Mexico and the U.S., and an announcement is made when the USMCA is signed later this week,” Dykes said. “Until then, the U.S. dairy industry cannot fully benefit from the USMCA.”

The briefing was hosted by the Aluminum Association and drew more than 50 attendees, including staff members of senators and representatives who serve on the House Ways and Means Committee, the Senate Finance Committee, the House Aluminum Caucus and the House Dairy Caucus. A delegation of Canadian members of Parliament also attended.

Mexico

Dykes explained that Mexico is U.S. dairy’s number one cheese market abroad and that three fourths of cheese purchased in Mexico comes from the United States. Last year, U.S. cheese companies sold more than $391 million worth of products to Mexico.

“Unfortunately, U.S. cheese is on the list of products now subject to a 25-percent duty in retaliation for U.S. duties on steel and aluminum imports,” Dykes said. “We’ve seen sales decline 10 percent for cheese in July, August and September due to the tariffs. The export data is two months behind, but we expect that trend to continue throughout the rest of the year.”

Losing the Mexican market will open opportunities for U.S. dairy’s competitors, Dykes said. For instance, the European Union (EU) could use this opportunity in the wake of its recently concluded free trade agreement with Mexico to gain market share. Allowing Mexico’s cheese tariffs to remain in place will greatly assist the EU in a market where the United States has long been the leading supplier, Dykes concluded.

China

Due to China’s intellectual property policies and practices, the United States has imposed tariffs on billions of dollars’ worth of Chinese goods. China retaliated against these U.S. tariffs with duties on dairy products. The retaliatory duties are also affecting U.S. dairy exports to China, Dykes said, noting that China is the third-largest export market for U.S. dairy and the leading market for U.S. whey.

“In July and August 2018, the first months with the retaliatory tariffs in place, U.S. whey exports declined 28 percent year-over-year. Similarly, U.S. cheese exports declined 46 percent in July and August 2018, year-over-year,” Dykes said.